We believe that by investing in companies which operate with high standards of corporate responsibility we can protect and enhance investment returns for our clients.

Through our rigorous bottom-up research process we gain an in-depth understanding of Environmental, Social and Governance (ESG) issues at a company level before they escalate and potentially threaten the value of our clients’ investments.

ESG is part of our investment process

There are four important inputs into how we analyse ESG for each company that we research - our analysts, our specialist ESG team, external research and our portfolio managers who actively consider ESG in their investment decisions.

Related insights

Corporate Governance Case Study - Sihuan

Sihuan Pharmaceuticals was the darling of the Chinese stock market in 2014, however our analysts had a negative view on the stock before it's demise. Find out why.

Want to know more?

FAQs

What is responsible investing?

The UNPRI defines responsible investment as an approach that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns. At Fidelity, responsible investment is an integral part of our investment process.

What does ESG stand for?

ESG stands for Environment, Social and Governance. Analysing ESG factors can be a key way to assess the sustainability and social impact of an investment in a company or a business. Examples of ESG issues include energy consumption and greenhouse gas emissions, supply-chain risk management, gender diversity, employee productivity, independent board leadership and CEO compensation.

What were Fidelity’s main activities in ESG over 2016?

The 2016 Governance and Engagement Report details the activities of our specialist Environmental, Social and Governance team over the year. Click here to view this report.

Who are the UNPRI?

The UNPRI works with its international network of signatories to put six Principles for Responsible Investment into practice. Its goals are to understand the investment implications of environmental, social and governance issues and to support signatories in integrating these issues into investment and ownership decisions.

The six Principles were developed by investors and are supported by the UN. They have more than 1,400 signatories from over 50 countries representing US$59 trillion of assets.

In 2016, Fidelity's score in Strategy and Governance increased to A+ and we maintained our A ratings on all equity modules, and scored A+ for our fixed income modules.

What are the UNPRI’s six Principles?

We will incorporate ESG issues into investment analysis and decision-making processes.

We will be active owners and incorporate ESG issues into our ownership practices.

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

We will promote acceptance and implementation of the principles within the investment industry.

We will work together to enhance our effectiveness in implementing the principles.

We will each report on our activities and progress towards implementing the principles.

What is active ownership?

Active ownership is about using our voting rights and our influence as an investor to improve the long-term value of a company. As stewards of our clients’ money we believe we have an important role to play in improving the governance of the companies in which we invest – helping companies become better companies. We engage directly with companies to encourage good governance and sustainable corporate practices.

What external governance-related bodies does Fidelity participate in?

Members of Fidelity’s ESG team are involved in a wide number of external and collaborative governance-related bodies globally.

These include the Chairmanship of the Investment Association’s Governance and Engagement Committee, representation on the Code Committee of the Panel on Takeovers and Mergers, the Companies Committee of the Confederation of British Industry and the International Corporate Governance Network’s remuneration committee. Fidelity is a signatory to the United Nations Principles for Responsible Investment, the UK Stewardship Code, the Japanese Stewardship Code, the Hong Kong Securities and Futures Commission Principles of Responsible Ownership and the Taiwan Stock Exchange’s Stewardship Principles for Institutional Investors. We are also active members of the Asian Corporate Governance Association, the Association of British Insurers, the Corporate Governance Forum, Assogestioni, the UK Sustainable Investment and Finance Association, the Investor Forums in both Japan and the UK, the European Fund and Asset Management Association Responsible Investment and Corporate Governance Working Group and many other trade and industry bodies around the world.

How does Fidelity integrate ESG factors into their investment decision?

Consideration of Environmental, Social and Governance (ESG) issues is an integral part of our investment decision-making process for all Fidelity funds.

ESG analysis is carried out at analyst level within the equity, fixed income, real estate and multi-asset teams and our portfolio managers are also active in analysing the potential effects of these factors when making investment decisions.

Fidelity’s internal analysis is complemented by extensive external research and ratings analysis.

Does Fidelity have an Exclusion List and if so what does it cover?

Fidelity has a Cluster Munitions and Anti-personnel Landmines (CM & APL) Exclusion List based on guidance from international conventions and supranational bodies. The CM & APL Exclusion list has been formulated using a third party ESG screening product with input from our internal research team. It includes those issuers who actually use, stockpile, manufacture and/or produce Cluster Munitions and Anti-Personnel Mines.

How many companies are on the Exclusion List?

How often is the Exclusion List reviewed?

The Exclusion List is reviewed every 6 months.

What is your policy on carbon emissions?

Climate change and carbon emissions exposure is consistently monitored across our funds and we incorporate these factors into our investment analysis across sectors where it is material. From our research process, we often and consistently engage with companies on their exposure to carbon and their strategy to deal with climate change.

The Fidelity FIRST ESG All Country World fund utilises Fidelity’s extensive in-house research aiming to achieve long-term capital growth by focusing on companies that maintain strong environmental, social and corporate governance credentials.

In particular, it aims to deliver a portfolio with an attractive ESG profile, higher average ESG score and a lower weighted average carbon intensity compared to that of the broader market.

Can Fidelity offer an ESG solution to institutional clients?

We can tailor portfolios for our institutional clients to reflect specific ESG themes or restrictions and we welcome the opportunity to discuss your particular requirements.

2 Weighted Average Carbon Intensity is defined as the weighted average of the amount of Scope 1 and Scope 2 CO2 emissions per $1million of sales of fund holdings.

Important information

Fidelity Personal Investing does not give advice based on personal circumstances so you are responsible for deciding whether an investment is suitable for you. In doing so,
please remember that past performance is not necessarily a guide to future performance, the performance of funds is not guaranteed and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. Before investing into a fund, please read the relevant key information document and ‘Doing Business with Fidelity’, a document that incorporates our Client Terms. If you are investing via the Fidelity SIPP you should also read the Fidelity SIPP Key Features Document incorporating the Fidelity SIPP Terms and Conditions. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.